Vedanta Limited Vs Securities and Exchange Board of India (Securities Appellate Tribunal)

In a significant respite to Vedanta Limited (“Vedanta”), the Securities Appellate Tribunal has allowed the Appeal filed by Vedanta against the order passed by the Securities and Exchange Board of India (“SEBI”) and has set aside the penalty of Rs 5.25 crores imposed upon Vedanta and Rs 15 lakhs on three officers of the Company.

SEBI had alleged that the public announcement by Cairn India Limited (“Cairn”) (now merged with Vedanta) for buying back its shares was a misleading announcement designed to influence the decision of the investors and induce them to trade in the shares of Cairn which was reflected in the increased trading volume after the buyback announcement. On that basis, SEBI alleged that Cairn by making the public announcement of buyback without any intent to fulfil it, had acted fraudulently and violated the provisions of the SEBI (PFUTP) Regulations and the SEBI Buyback Regulations.

Cairn had made the Public announcement on January 14, 2014 for buyback of its 17,08,95,522 equity shares of ₹10/- each at a maximum price of ₹335/- per share for a maximum amount of ₹5,725 crores in accordance with SEBI Buyback Regulations. The buyback offer was scheduled to open on January 23, 2014 and close on July 22, 2014.

Cairn was able to buy back 3.67 crores shares, after spending a sum of Rs 1,225 crores, which represented 21.48% of the total shares earmarked for the buyback as against the requirement of buying back a minimum of 50% of the shares earmarked for the buyback.

Vedanta argued that Cairn made all attempts to complete the buyback and had placed purchase orders on the stock exchanges almost on the daily basis but the same could not be completed as market price of the shares remained higher than maximum buyback price during the majority of the 6 months buy back period, which was beyond control of Cairn.

Vedanta relied on SEBI’s own investigation report wherein SEBI had come to the conclusion that no major impact on price and volume was observed on the basis of the corporate announcement made by Cairn and argued that thus allegation of fraud could not have been made against Cairn.

Mr. Somasekhar Sundaresan, Advocate instructed by DMD Advocates, led by Mr. Pawan Sharma, Advocate and Mr. Rishabh Sharma, Advocate appeared for Vedanta Limited.

Mr. Shiraz R, Senior Advocate instructed by a team led by Mr. Manish Chhangani, Advocate appeared for Securities and Exchange Board of India.

The matter has also been reported by:

TaxGuru – https://taxguru.in/sebi/breather-vedantas-cairn-alleged-buyback-fraud-sat-reverses-sebis-order.html

HC: a batch of Writ Petitions seeking relief against a private Bank in cases where the Builder/Developer has failed to deliver possession, are not maintainable

The Division Bench of the Hon’ble Delhi High Court has recently, by way of a Judgment delivered on 10 August 2023, held that a batch of Writ Petitions seeking relief against a private Bank in cases where the Builder/Developer has failed to deliver possession, are not maintainable.

The Hon’ble Court held that since the rights claimed by the Petitioners flowed from private contracts and each of the cases also involved complex and disputed questions of fact, the High Court is not the appropriate forum to adjudicate the disputes. Additionally, it was observed that the Petitioners were not without recourse, as they had other avenues to pursue their grievances before various fora.

Our Litigation Partner, Kuber Dewan, along with Neeharika Aggarwal, Counsel and Kaustubh Srivastava, Associate, appeared on behalf of the Respondent Bank.

HC: Writ Petitions filed seeking relief against Banks and other Financial Institutions in cases where the Builder/Developer has failed to deliver possession, are not entertainable

The Hon’ble Delhi High Court has recently, by way of a judgment delivered on 14 March 2023, held that Writ Petitions filed seeking relief against Banks and other Financial Institutions in cases where the Builder/Developer has failed to deliver possession, are not entertainable.

While dismissing the Writ Petitions, the Learned Single Judge made a distinction between “maintainability” and “entertainability” of the writ petitions and observed that these two were distinct legal concepts.

Reiterating the well settled principle that rights emanating from private contracts cannot be enforced by way of a Writ Petition, the Court held that since the rights claimed by the Petitioners flowed from private contracts and each of the cases also involved complex and disputed question of facts, the Court would not entertain the Petitions.

It was also observed that not only did the rights of the Petitioners flow from private contracts, but also, the parties were not remediless, as alternative remedies before various fora are available to the Petitioners to address such grievances, and any interference by the Writ Court would amount to usurpation of powers vested with the respective fora.

Therefore, in view of the availability of alternative remedies available to the Petitioners, the Hon’ble Delhi High Court did not find it appropriate to entertain these Writ Petitions.

Our Litigation Partner, Kuber Dewan, along with Neeharika Aggarwal, Principal Associate; Trisha Raychaudhuri, Senior Associate; and Kaustubh Srivastava, Associate, represented one of the Respondent Banks.

HC: 9 years delay ‘woeful’ & ‘inexcusable’; Held Sec.271C penalty show cause notice time barred

HC: 9 years delay ‘woeful’ & ‘inexcusable’; Held Sec.271C penalty show cause notice time barred

In a significant judgment, Delhi High Court held that a show cause notice issued by the Revenue under Section 271C, for imposing penalty, was ‘woefully’ delayed, thus, quashed the show cause notice. The Court further stated that the Revenue’s delay in issuing show cause notice i.e., almost 9 years from end of relevant AY, was inexcusable and remarked that, “even if we were to take an indulgent view of the matter, and give leeway to the respondent/revenue, that the period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of Section 275 of the Act would commence either from 2013 or 2014, there is a period of unexplained substantial delay, as the SCN, concededly, was issued only on 09.11.2017.” The ruling was delivered by the Division Bench of the Delhi High Court.

Our Partner Sachit Jolly, along with Rohit Garg (Associate Partner), Soumya Singh (Senior Associate), Disha Jham (Senior Associate) and Sohum Dua (Associate) appeared for the Assessee.

Tyre biz cartelisation: NCLAT asks CCI to pass fresh order; review fines to save domestic tyre industry

The National Company Law Appellate Tribunal has recently set aside the decision of the Competition Commission of India in the 2013 tyre cartel matter (where the CCI imposed a penalty of around INR 18 billion on domestic tyre companies). Not only has the Appellate Tribunal directed the CCI to re-examine its errors, but also to review the penalty with a view to save the domestic tyre industry which has been under pressure from global tyre companies. Interestingly, the Tribunal observed that the object of the Competition Act is also to keep in view the economic development of the country by promoting the domestic industry. Violators may be penalised but with a view to encourage reform ‘instead of virtually putting the organisation on weak health’.

Our Competition Partner, Vivek Agarwal, led the matter for a leading tyre company.

Read more at https://lnkd.in/dgehdaUv

Sachit Jolly was appointed as Amicus Curiae

Our Partner Sachit Jolly was appointed as Amicus Curiae to assist the Delhi High Court in a matter dealing with post-search assessments. Agreeing with the submissions made by Mr. Jolly, the Court held that the ratio of Kabul Chawla decision was not diluted by the Dayawanti ruling. The High Court also appreciated the assistance rendered by Mr. Jolly.

Delhi HC dismisses Revenue’s appeal on validity of post-search assessments, made in absence of incriminating material, as devoid of substantial questions of law. Revenue relied upon coordinate bench ruling in Dayawanti to submit that a statement recorded under Section 132(4) during the search operation can be treated as incriminating material based on which an addition can be sustained. Amicus Curiae submitted that there were no abated assessments, thus, no addition could be made without any incriminating material and there was, in fact, neither any fresh information/material unearthed during the search operation nor any statement under Section 132(4) was recorded which could be classified as incriminating material. HC observes that coordinate bench ruling in Dayawanti relied upon by the Revenue was in peculiar facts and does not dilute Kabul Chawla’s ratio. With regard to Punjab & Haryana HC and SC rulings in Assessee’s case relied upon by the Revenue, HC holds that SC directions were given after Revenue conducted search; thus, they cannot form incriminating material found during the search.

Partner Sachit Jolly appeared for the Assessee

The High Court of Punjab & Haryana: No change-in-law relating to Intermediary taxation; Genpact BPO not an “Intermediary”; Applies ‘consistency principle’. The Hon’ble Court restored the order-in-original granting refund in favour of the assessee and directed that the benefit of this order shall enure to the assessee for grant of subsequent refunds as well.

Our Partner Sachit Jolly appeared for the Assessee.

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